The extended FY policy is applied when the economy has a lower output level of potential output as the Government increased spending or tax breaks to stimulate general demand, the total demand on goods and services increased making the road IS shifted to the right. At this equilibrium yields increase thereby increasing demand money to serve the purpose of the transaction. The increase in demand this money pushed interest rates increase and decrease investment. The overwhelms such investment intent part of the extended policy influence FY for the total demand.
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